Hi, it’s Alicia here at newVAadvice.com and I’m back with another segment in the Getting Started Series.
Grab the audio version of this post here:
Today we’re going to talk about tracking your money in your virtual assistant business.
Disclaimer: I am not an accountant and I’m also not providing legal advice. This is simply an informative session. The information that I share is based on guidelines for the US. Please seek professional advice if you have any questions as to what’s best for you and your business.
There are a couple of things that you need to think about when it comes to this topic.
First, you need to consider how you’re going to collect money from clients and where you store that money. Second, you need to consider tracking your income and expenses.
Housing Your Money
Let’s start with collecting money from your clients. First you need a place to house that money. You want to start with opening a separate bank account for your business. The IRS requires that you keep your business and personal financials separate from one another.
If you already have a good relationship with a bank for your personal account, you may want to check with them about a separate account for your business. You also have the option of a credit union. I suggest that you do some research and check into your options to decide what’s best for you.
Once you have your separate account set up, you can start receiving payments from clients. We talked a little about this in Part 2 of the series. You want to make it easy for clients to pay you. And it’s easier now more than ever to receive payments virtually. But you’re not going to get away from some type of payment processing fee. It’s just the reality of doing business this way. I hear people asking all the time for the best option to receive payments online without having to pay fees. You’re not going to get around it. It’s the cost of doing business online. The good thing is that you’re able to write off those payment processing fees on your taxes. We’ll talk about taxes more later.
So, if you’re looking for a simple way to collect money from clients online, you can use PayPal. If you have a PayPal account, their invoicing feature is free to use. A client can choose to pay your invoice via their own PayPal account, and if they don’t have an account, they can pay with a credit card. You link your business bank account to your PayPal account. And once a payment is received, you can transfer the funds from PayPal to your bank account.
This way, if you’re accepting all of your payments via PayPal, it’s also an easy way to track your income. It’s all in one place, and you can print an income report any time you want.
Another free tool you can use to collect and track payments is Wave. You can send an invoice to a client, and they can pay with a credit card or bank transfer payment. You’re also able to track your expenses with this one, so you’d have income and expense tracking all in one place.
If you’d like other options for invoicing tools, you can check out this article that Loretta Oliver wrote on the topic over at VAHelper.com. She gives you a full breakdown on cost and ease of use for each tool, as well as comments from other service providers explaining what they use in their businesses.
So, we’ve talked about where to keep your money, how to send invoices, and tracking income.
Now let’s talk about expenses. The type of expenses that you have in your business may be slightly different than someone else’s based on the equipment that you use and the services that you offer, for example. You need a way to track those expenses so that you can easily reference them for taxes and be able to write them off for your business.
Here is a list of some basic expenses that you may have in your business:
- Office equipment/supplies (Ex: desk, computer, printer, toner, daily planner, pens, etc.)
- Coaching and educational courses (Ex: business coaching, mastermind, skills courses, ebooks, etc.)
- All or part of your phone bill if you use that phone for your business
- If you have a dedicated office space, you can deduct part of your utilities and possibly homeowner’s insurance for the space
- Tools or software that you use to run your business (Ex: AWeber, Dropbox, CRM)
- Website hosting and domain name
- All of part of your internet expenses
- Internet security software
- If you hire someone to handle something in your business (Ex: accountant, social media manager, tech VA)
- Meals when meeting with a client or colleague
- Travel expenses when related to your business
- Payment processing fees
Those are just a few of the basic expenses that you can consider in your VA business. You need a way to keep track of these expenses. I mentioned Wave Apps earlier as an easy way to track your expenses. You want to use a system that’s easy for you and allows you to itemize.
Take a look at that article again over at VAHelper.com for more solutions.
If you’re trying to keep your business as paperless as possible, I recommend scanning in hard copy receipts and downloading or taking screen shots of online receipts. Most expense tracking tools allow you to scan or save a copy of a receipt and link it to the expense that you’re documenting. Then if you need to, you can click on that expense item and open up a copy of the receipt.
My suggestion is to make tracking your expenses a regular habit. If you stop by Staples, in store or online, and buy some toner, immediately open up your expense tracking software and add that item. Then you don’t have to stress and spend tons of time documenting things when tax times rolls around.
For more info on taxes and your VA business, listen in here as I interview a tax expert.
And that covers tracking money in your virtual assistant business. Setting up tools and processes like this now will save you time and effort in the future, and help you to run your business more smoothly.
- Open up a separate bank account for your business
- Decide on a tool for receiving payments
- Decide on a tool for tracking income and expenses
Let me know what you use to track your money or leave a comment below.
Missed the previous segment? You can find it here.